From Maximized to Optimized – The Nature of Investing: Resilient Investment Strategies through Biomimicry

Transformation 3

From Maximized to Optimized

“What’s with the share count?” my colleague glanced up at me, eyebrows raised skeptically as he looked at my freshly constructed spreadsheet.

“Ummmm …” I frowned at the paper, willing it to offer up insight. Alas, it was silent.

“Okay,” he sighed. “This company is growing, right?”

“Right!”

“It says here they are opening fifty more stores next year, right?”

“Right!”

“And it costs about two million dollars to open each store, right?”

“Right!”

“So how are they gonna pay for that?”

“Ohhhhh.”

“Exactly. They’ll need more funding. So fix the share count and then let’s talk.”

This was the exchange between me, a brand-new equity analyst looking at her first retail company, and one of my colleagues who managed a large growth-oriented mutual fund. (Yes, the details have been changed to be slightly more polite than the exchange that actually occurred). Luckily, because of this sort of conversation, I learned early on that in order for any endeavor to grow, some form of additional resource is required (in this case, issuing more stock, so that the company had more cash, so that it could pay for the new stores). This is a notion that is completely transparent when we consider growth of a seedling, or a baby—they obviously can’t grow without nutrients. But when it comes to business and finance, sometimes we like to pretend that we can conjure growth out of thin air, with no resources required beyond our own imaginations.

Growth is not just a wish and a prayer, nor a goal unto itself. To be effective, growth needs to be integrated with development.

Nature’s Principle: Integrate Development with Growth

Growth is a deeply embedded assumption in many human endeavors. To balance out this simplistic frame of mind we have nature’s principle, integrate development with growth. The most important element is that this is an “and” statement: growth and development need to occur hand in hand, not one separate from the other. Think of a sunflower, where the stem can grow several feet in just a couple of weeks. What is unseen, but completely necessary, is the root structure of the sunflower, which is growing with just as much fervor down and across the soil, to anchor that stem. And still, we can see examples every year at the end of the season where a giant, seed-laden head just proves too much for the infrastructure of the plant, and the whole sunflower topples over, uprooted by its own top-heavy weight. Who wants to be that sunflower? A truly balanced “and” embedded within “development and growth” prevents a brilliant growth spurt from an eventual crash.

The subprinciples of integrate development with growth are:

  • Combine modular and nested components.
  • Build from the bottom up.
  • Self-organize.

The subprinciples of development and growth give important answers to the question of “how.” We could easily envision a plan that integrates development and growth in a highly engineered way, but the first subprinciple emphasizes, combine modular and nested components. The idea is not merely to grow larger, but to grow in ways that are repeatable and that fit together as an organism grows. Consider an octopus—it does not have one huge mega-arm or eight arms with completely different designs (though that might make for a cool cartoon character). An octopus has smaller suckers that grow to larger suckers, and they’re aligned in regular patterns along each of its limbs, allowing it to grow in a way that is both efficient and effective. In fact, even within each sucker an octopus has modular components: there are three sorts of muscles that all work together to make the sucker function.1 This is what we mean by modular and nested components.

When growth is approached in that modular way, it is easier to envision a system that is built from the bottom up. A mangrove island can become a robust structure, but not through fancy preplanned blueprints or top-down engineering. A single seed sprouts and its roots begin to slow the water around it, which helps to settle more sand and more seeds nearby. Then organisms begin to live among the roots and add organic matter until the sand becomes soil. This system is built from the bottom up, and the growth is internally generated; though systems take on energy from the outside, the actual creation happens from the bottom up, from within. Of course there is value to blueprints and planning, but there is also value to systems that allow for self-organizing growth. It need not be one or the other.

The classic example of a self organized system is an ant colony, where the function of the whole is optimized through the actions of individual members. For example, some individual ants have more sensitivity to hunger, and they are the first to leave the nest in search of food. If the food is more broadly needed within the colony, other gatherers will soon follow the first ones out to search for nourishment. Communication within the system is optimized as well, with scouts leaving positive pheromone trails toward the good food sources and negative trails when their searches have not borne fruit.2 There is no ant commander in chief, no strategic plan for the colony sitting on a little underground shelf: all of these individual activities, along with appropriate feedback loops, enable an optimized total system.

This principle seems easy to apply on the surface. Of course growth requires development alongside it, focus on the supporting structures that allow expansion to be solid and sustained. But delving into the subprinciples, we find some more intriguing ideas:

First, these principles encourage us to move from a linear growth/nongrowth mind-set to a more integrated point of view. Instead of choosing to invest in development or growth, they compel us to invest in both. The first questions for investors should not be “How fast is this investment growing?” but rather, “Why is it growing?” and “How is it growing?” In fact, in many situations the most important topic to explore is whether an endeavor can shrink in an elegant, nondisruptive way, returning resources to the environment when conditions warrant it.

The second embedded concept is a shift from top-down controls to bottom-up activity. At first this idea might seem to be just the opposite of the managerial approach taken in many of our traditional (and successful) organizations, where complex business planning exercises and intricate monitoring systems seem prevalent. But a closer examination of this principle shows that the idea is “to create conditions that allow components of a system to work toward an enriched system,” and to result in a whole that is more than the sum of the parts.

I confess that my first reaction to this particular idea was to tick off a list of all of the reasons for a company to refuse to model itself after an ant colony. Aren’t we different? Aren’t we special? Aren’t we more sophisticated? Upon further reflection, I realized that the very best groups I’ve been associated with actually embrace this notion of self-organization, though few label it as such.

For example, for a number of years, I led one of the largest investment research groups in the world—an endeavor that was both complex and complicated, to say the least. Thankfully, this role did not entail running around to each analyst telling him what to do that day—and if it had, the results would have been disastrous for all concerned. Instead, the leadership of our group tried to set clear objectives, the “what,” and perhaps more importantly, clear guidelines for “how,” in terms of responsibility, collaboration, and integrity. Then it was up to each member of our team to figure out how her own work could best contribute to the whole. Once in the early years of my career a competitor referred to our research team as “the Borg,” because we seemed to have one giant collective mind. I don’t think he meant it as a compliment, but I thought it was kind of cool (minus the intergalactic warfare, that is). Not too different from a beehive, a mycelial network, or, yes, a termite colony.

In order for that sort of bottom-up organization to be effective, these principles also emphasize the concept of simple rules to govern each part of the system and to guide the development and growth of the whole. Unfortunately, within finance, this crucial element seems to be at odds with an ever more complicated maze of regulatory, tax, and market-related complexity that grows more and more weighty every year. When I think of simple rules, I recall the first compliance agreement I ever signed as an employee of a big financial firm. It was a few pages long, presented with great (and appropriate) solemnity, and said, in essence, “I promise not to do anything that goes against the interests of our own shareholders.” Fast-forward twenty years, and compliance agreements in financial firms look like phone books: page after page of byzantine “what if” scenarios, backed up by floors full of lawyers who try to monitor activity via endless data reports. There are some good reasons why all that complication has developed, but the net result is often to make participants feel less power and responsibility, not more. The slim documents of old essentially said, “We trust you—sign this so we are officially aligned,” while the current mega-documents seem to say, “We don’t trust you, and you could never really comprehend everything that’s in here—sign this so we can punish you later.”

When we add these ideas about integrated growth and development together, we do not see a recipe for the common “command-and-control” models seen in some of our largest organizations, nor do we see a detailed up-front blueprint process like those employed in some of our largest structural creations. However, alignment with this set of life’s principles does not mean that our human constructions should go without planning or guidance. Instead, these principles remind us of the true function of planning, leadership, and management: planning and leadership are best seen as the process of setting those simple rules that govern a system. Management—whether of an organization or an investment portfolio—is best seen as setting in place appropriate feedback loops. Those loops can incorporate new information and assess needs for new or different resources, thus ensuring that growth and development are both supported.

Figure 3–1 Integrate Growth and Development: The Beehive

Wild beehives are a great example of integrating growth with development: the bees build out the infrastructure of the hive not all at once, but bit by bit, only as much as is needed for the colony’s functioning.

http://www.waldeneffect.org/blog/Wild_honeybee_hives/

Translation to Investing

Before moving to specific financial examples, it is important to stop to consider the fundamental idea of growth as it relates to investing. The assumption that underpins almost all of our products, processes, and procedures is not just that growth is good, but that it is required, our central objective. And if growth is good, more growth must be better. Fast growth and big growth must be best of all.

Sometimes this thirst for growth translates to a passion for business concepts like “scalability.” But nature does not scale, at least not to an infinite degree. Nature replicates. Nature develops. Unlimited growth in investing is thought to be nirvana, but unchecked growth in nature is, quite literally, disease. It’s cancer.

This mismatch between growth in nature and growth in finance is worth serious consideration. And again, it circles around to the core concepts of context and connection. As we’ve already discovered, it’s been increasingly common to disconnect financial activity from reality, and yet, at the end of the day, there are still physical limits to growth. These limits are increasingly obvious on a planetary level, but it’s easier to think of a simple natural example like a pumpkin. If you want to eat the pumpkin, you aim for the smallest, sweetest varieties: trust me, growing them bigger just makes for stringy, watery pumpkin pies. But if you want to win the pumpkin-boat contest in Damariscotta, Maine, you want the biggest, strongest, lightest vegetable possible. Different contexts, different approaches. And yet when it comes to investing, usually we settle for feeble distinctions by referencing financial risk–return trade-offs, ignoring all of the other vital dimensions of growth, measurement, and success.

Indeed, it is rare for an investment policy statement to not include the word “growth.” Even in our philanthropic organizations, it is unusual to see a plan for shrinking assets over time, though the entire premise of a charitable foundation’s existence is to give money away. Of course, one reason that many of us invest is (at least in part—and often in large part) to grow our own resources. But it is helpful to pause to return to the central question of biomimicry, the central question of life: “Toward what end? What is the purpose?” Related to this is the question we usually skip, “Growth of what?” Without thinking, we usually give our growth targets in dollars or percentage points, but there are many other dimensions to consider. We could aim for growth of community, or growth of supportive infrastructure, or growth of tangible asset values, or growth of personal fulfillment. At the very least, we could root for growth of long-term economic value rather than growth in reported earnings per share.

After the what, we need to consider why. Why do we want growth, whether it’s of dollars or apple trees or joy? Is it to fuel consumption? Is it to build up security for uncertain times? It is to provide for future generations? Is it simply to “win”? These could all be legitimate reasons under certain circumstances, but they are different reasons, and they point to different pathways to guide us from here to there. Perhaps most importantly, they also point to different sorts of development that might be needed along the way.

Finally, we need to ask not just how much, but how? Almost every endeavor offers the chance to maximize short-term growth in an inefficient, wasteful manner. But every good businessperson recognizes that this approach is just hurting his own enterprise; a much more interesting question is, can growth be achieved in a way that is not just sustainable, but regenerative? This is perhaps the biggest question for the world economies, too: Can we fuel healthy standards of living for all, in a way that uses fewer physical resources, instead of more?

A mechanized, one-size-fits-all approach to growth maximization might be efficient, but it is decidedly not effective. What we need is growth combined with development—optimized, not maximized. Multi-dimensional growth, not just “bigger.”

Natural Scorecard: High-Frequency Trading

High-frequency trading provides a fascinating case study for the principles of growth and development. This segment of finance, and its acronym, “HFT,” is beginning to be spoken of with the same ominous overtones as CDOs, as the activity of these firms has been blamed for several “flash crash” events as well as for boosting overall market volatility. In light of these events, to simply declare that high-frequency trading is “bad” might feel satisfying, but it is not an intellectually rigorous statement. And all of us would recognize that some level of market making, whether in stocks or potatoes or time exchange, is part of a healthy, ongoing economic ecosystem. Examining high-frequency trading through the lens of “integrate growth and development” provides a more nuanced understanding.

First, a clear definition is in order: high-frequency trading is not the same as market making, and it is not the same as “the” market. At its core, a high-frequency trading firm does the same thing that dozens of others do: it matches buy and sell orders on securities, in this case via electronic trading platforms. And, as the name implies, it does so very, very fast. HFTs often complete transactions in milliseconds or even microseconds. (A microsecond is a millionth of a second; it takes several hundred milliseconds—three hundred thousand microseconds—to blink your eye.) In addition to acting as traders for others, many HFT firms also trade for themselves, using quantitative trading algorithms for their own purposes.

I call this the “spin class” approach to trading: if you want a really efficient workout, when the perky instructor at the front yells, “Faster!” you obey, pedaling until your legs are just a blur, they are moving so fast. Likewise, when markets seemed to require more liquidity, participants naturally called out, “Faster!” and the high-frequency trading firms obliged, cranking up volumes and speed until transactions were just a blur, moving so fast that they are literally unmatchable by human eyes, let alone human brains and human judgment.

But the thing about spin class is, it ends. We are not meant to stay at peak activity levels forever, and once a workout is over, there is always time to recover. Again, this reflects a cycle of integrated development and growth. With the market, though, spin class has become eternal. Policies and practices that made sense in times of extreme duress were codified so that they became the norm—a permanent peak workout in trading volumes. This constant focus on speed and growth might be a clever mechanical trick, but it is not a characteristic of a healthy ecosystem.

Yet when it comes to growth, few sectors of finance can compare with the record growth of HFT in the mid-2000s. In 2005, this activity represented about 21 percent of total market volume, but by 2009, this figure was a whopping 61 percent. Overall market volume had also grown significantly during this period, from about four billion shares of U.S. stocks traded daily to just under ten billion, but if you look closely at those numbers you’ll see that most of that growth (about 90 percent) was accounted for by the growth in HFT.3 If we picture the market as a tree, and all of the different trading firms as branches, the HFT branches grew all out of proportion to the rest of the tree during this period. We’ve all seen weird, lopsided growth spurts like this in nature, and it’s easy to see how they are resolved: either the other parts of the tree have to develop to catch up with the runaway limbs, or eventually, something will break and crash to the ground. The whole tree could even be destroyed.

When we compare the basic activity of high-frequency trading against the “integrate growth and development” principles, here’s what we find:

• Does HFT combine modular and nested components in its construction? Each trade is an individual action, and each piece of a trading algorithm is also discrete. When these pieces are nested together, that’s when the whole firm and whole algorithmic approach are revealed. So, there is some evidence of using modular and nested components.

• Does HFT build from the bottom up? These firms do not begin by examining the entire market and then carving off slices where they’ll participate. Each trade, each security, each exchange presents individual opportunities, and these aggregate to form overall activity. So, there is some evidence of building from the bottom up.

• Does HFT demonstrate self-organizing principles? The concept behind a trading algorithm is to create simple rules to guide activity (of course, the simple rules are wrapped in elegant, perhaps complicated, code). And the business concept behind most HFTs is that gathering up tiny profits over and over again creates good business results. In theory, at least, this idea is not so far from life’s principle of self-organization.

The answer to all of these questions is “sort of.” HFT in and of itself is not in clear alignment with the natural principles of growth and development, but it is not obviously misaligned either. A grade of C, maybe C-plus.

But now let’s consider a more systemic view of high-frequency trading, along with a less benign backdrop: the “flash crash” of 2010. On May 6, 2010, the Dow plunged over 9 percent in midafternoon, only to recover most of that ground by the close of the day. There have been several smaller, similar events since then, but the 2010 example is the most vivid and the most studied to date.

By 2010, high frequency trading was over half of market volume, so naturally, when the flash crash was analyzed, activity of these firms was a crucial piece of the analysis. The video depictions of trading during the flash crash are especially eerie: they show order routing between the major trading firms, with each firm a node at the edge of a big circle.4 At first the flow looks just like a bunch of bees flying between nectar sources and beehives, or balls on a playground: dots flying regularly to and from each major node. And then, suddenly, the flow stops. Every once in a while a signal pulses out from one of the hubs into space, but it’s met with silence. No response. When I watch these trade-flow images, I am still oddly shaken. In many market crises, trading values fall dramatically, but trading volume is still very active. Watching these depictions, where activity just stops altogether, is like watching a living organism die.

Explanations for the flash crash are long, multilayered, and still subject to some dispute, but consider these facts:

The official SEC explanation of the flash crash centers on a single order to sell futures contracts with a value of just over $4 billion. The sell order caused pressure not just on the contracts in question, but on the stocks related to those contracts, and the ripple effects of the resulting volatility caused some traders to step back, while other automated programs continued unchecked.5

According to the New York Stock Exchange, part of the problem was a mismatch where systems at the NYSE are meant to automatically slow trading during extremely volatile times, whereas the systems at some HFT firms are, if anything, designed to speed up as volatility increases.6

As part of the investigation process in 2010, the Commodities Futures Trading Commission (CTFC), the equivalent of the SEC for commodities trading, created a technology advisory committee of quantitative traders and other technological experts. An advisory committee like this had not existed for five years—the same five years when HFT was growing from 20 percent to 60 percent of trading volume.7

One critique of the SEC investigation is that the time increments it used for analysis are too long (the report accounts for second-by-second trading activity on that day). Alternate analytical views favor timing measures of just twenty-five milliseconds for their analysis. It is hard for our analysis to match the pace of trading, even in retrospect, when we have all the time in the world to calculate and consider.

Our goal here is not to decipher or debate the exact causes of the flash crash, but rather to highlight some clear systemic mismatches, areas where growth was decidedly not aligned with development. Though our assessment of HFT as a single component in the system showed some potential for alignment with life’s principles, this inquiry into the broader trading landscape clearly shows a system that contains seriously misaligned elements. The growth in high-frequency trading was decidedly not supported by commensurate development in all of the structures needed for healthy function. There was not growth in the rest of the trading market alongside the growth in HFT. There was not development of oversight or technical expertise in other parts of the system to appropriately incorporate the rise of HFT. There was not progress in related systems like the NYSE’s so that their functions aligned with (or complemented) those of high-frequency firms.

Comparing the overgrown version of HFT systems with the principles of “integrate growth with development,” we find considerably less alignment than before:

• Does HFT combine modular and nested components in its construction? Though each organization, each process, and even each trade might be shown to be in partial alignment with these principles, each of them also demonstrates some areas of misalignment. And in this case, when all those pieces of the system are assembled and under duress, the cracks are magnified and the entire system is less aligned than its parts.

• Does HFT build from the bottom up? There was no way for the structures, systems, processes, or regulations embedded in the individual organisms (other parts of the system) to evolve fast enough to match the growth of high-frequency trading.

• Does HFT demonstrate self-organizing principles? The feedback loops were weak and often did not extend beyond the walls of any single participant in the system. Connections between participants extended far beyond counterparties for any given trade, and yet these links were underestimated.

Even the SEC concluded, “May 6 was also an important reminder of the interconnectedness of our derivatives and securities markets.”8 A system lacking in understanding of its multilayered connections, lacking in feedback loops that incorporate them effectively, lacking in mechanisms that allow for rapid evolution … this is a system incapable of integrating development with growth.

Evolution

Growth discussions are often most feverish when we discuss early-stage ventures, and for good reason: often, without rapid growth, these fragile ventures fail. Within this entrepreneurial arena, there are several hopeful developments.

First, the notion of “fail fast” has taken hold in many new ventures. This idea recognizes the inherent fragility of any new endeavor, and instead of denying that fragility, encourages participants to embrace it, planning for small experiments, quick assessments, and, if need be, graceful endings. The focus is not exactly on failure, but on cultivating an ability to quickly test, assess, and adapt. Building this concept of modular testing and designing with appropriate feedback loops from the very beginning of an enterprise is a fundamentally different starting point from the twentieth-century “deep research, big bet” approach, which was in part necessitated by much more capital-intensive businesses. If you failed fast back then, you often did not have the resources to adapt and try again.

Second, more attention has been paid to the “development” part of development and growth in recent years: dozens of incubators and mentor programs are available for entrepreneurs now, whether they are writing new software in a loft or training rural health-care workers half a world away. The communities that are arising among these incubators, innovation corridors, and entrepreneurial hubs are adding to the diversity, vibrancy, and strength of the overall system. Additionally, there is more attention paid to the fundamental capital intensity of early-stage business models, which often relates to the ongoing resource-intensity of those same businesses. Growing a software business has a fundamentally different set of needs than growing a lumber business, and those differences are becoming better understood by entrepreneurs, managers, customers, and investors.

Most importantly, our definitions of growth and growth’s purpose have begun to expand. Alternate, more multidimensional views of prosperity are extending far beyond the narrowness of standard measures like gross domestic product. Measures like the Social Progress Index and gross national happiness are being discussed in the halls of Davos and Harvard Business School,9 and are beginning to address the shortcomings made famous by Robert Kennedy in his 1968 speech:

… gross national product counts air pollution and cigarette advertising, and ambulances to clear our highways of carnage. It counts special locks for our doors and the jails for the people who break them. It counts the destruction of the redwood and the loss of our natural wonder in chaotic sprawl. It counts napalm and counts nuclear warheads and armored cars for the police to fight the riots in our cities. It counts Whitman’s rifle and Speck’s knife, and the television programs which glorify violence in order to sell toys to our children. Yet the gross national product does not allow for the health of our children, the quality of their education or the joy of their play. It does not include the beauty of our poetry or the strength of our marriages, the intelligence of our public debate or the integrity of our public officials. It measures neither our wit nor our courage, neither our wisdom nor our learning, neither our compassion nor our devotion to our country, it measures everything in short, except that which makes life worthwhile. And it can tell us everything about America except why we are proud that we are Americans.10

As our definitions expand, they can more accurately reflect true cost and true profit, allowing us to make more thoughtful, complete investment decisions, both as individuals and as societies.

Along with the rapid growth in social entrepreneurs, we are seeing a generation of new businesspeople for whom “double bottom line” and “triple bottom line” are needless fabrications. These servant-leaders take an integrated view from the very beginning, considering growth of impact, growth of scale, and growth of finances in an intertwined, multifaceted way.

Many of these new entrepreneurs follow in the footsteps of predecessors like Judy Wicks, owner of the White Dog Café in Philadelphia. Given the huge success of the café, Judy was constantly urged to grow her business through franchising or other physical duplications. But she chose otherwise:

Instead of making business decisions to maximize profits, I made decisions to maximize relationships. And in the long run, I believe this was also the reason for our financial sustainability. I had come to realize that we could measure our success in other ways than growing physically. We could grow by increasing our knowledge, expanding our consciousness, deepening our relationships, developing our creativity, building community, and enhancing our natural environment. All this while also increasing our own happiness and well-being, and having more fun.11

This sort of multidimensional growth reflects a more resilient approach, with multilayered, powerful benefits. And importantly, it provides an example of growth that does not rely on constantly increasing use of natural resources. Just the opposite, it helps to regenerate community ecosystems and natural ecosystems alike.

This breadth of definitions is also echoed in the B-corp (benefit corporation) movement, where businesses explicitly embrace goals that go beyond their financial statements, reminding us of the many forms of impact that our enterprises can have. The B-corp “Declaration of Interdependence” reminds us that all of our endeavors have multidimensional elements that link to a broader social web, and that acknowledging this connection is the first step toward healthy, long-term development. B corps “compete not just to be the best in the world, but to be the best for the world.”12

Pathway to Practice

How can we avoid financial activity that is the equivalent of a never-ending spin class? The life’s principle “integrate growth with development” offers some clear pathways.

Instead of assuming that growth and speed are inherently good, we can pause to question the purpose and nature of those characteristics. Do we need growth in sheer size, or in complexity, or in redundancy? Do we need greater speed, or the ability to modulate speed as conditions change? Some of the initial growth in HFT brought benefits to overall market liquidity, at a time when that liquidity was a vital “nutrient” for the market and in short supply. But just as farmers adjust techniques to suit varied soil and weather conditions, we need to continually re-ask the fundamental question, what is needed here? What is needed now? Maybe the answer is “more,” but the obvious follow-on question is “More what?” And why?

Once we see growth and development as intertwined concepts, it’s impossible to separate them. The extension of these twin ideas to other sorts of investing is almost unavoidable: If we are looking at a stock, how (and why) is the company planning to grow? Have they thought through all of their “nutrients” and planned for them as carefully as they are planning for financial results? Do conditions warrant a plan for elegant ways to shrink and return nutrients to the broader system, instead of pushing for resource-intensive ways to grow? If we are looking at municipal bonds, they quickly become much more interesting and multifaceted than a simple scan of yields to maturity. What is happening in the municipality? Is there a healthy mix of employers, citizens, infrastructure? Is the bond based on one giant mega-development, without other community supports around it?

As we extend the application of this growth and development principle, we can move from a mind-set of “either/or” to one of “and,” from unidimensional to multidimensional.

Sowing Seeds of Integrated Growth and Development

Here are some fundamental considerations to help us move toward balanced, integrated growth and development:

• Reexamine the fundamental purpose of growth. Growth in what? In what way? Over what time period? With what characteristics? Toward what purpose? Try to avoid the automatic “more is better” presumption.

• Balance investments in growth with investments in development. This is helpful on a micro level, as we look at individual investment decisions, and on a macro level, as we consider our overarching purpose in investing. Constantly ask, where do we need to add resources to support the type of growth that we seek?

• Accept that spin class is meant to end. When we find ourselves in investment discussions where the premise is never-ending, effortless growth, recognize that that premise is fiction—unsustainable, unhealthy, or both. How can we develop systems that slow, stop growing, or shrink in elegant ways? At the very least, how can we focus on endeavors that can grow output or outcomes in ways that do not grow in physical resource intensity at the same time?

We can invest in multiple dimensions simultaneously, redeploying current resources to build up supports for the future, instead of harvesting everything in sight for current use.

We can consider growth and development more broadly and fully.

We can plan for graceful shrinking, conserving and recycling resources for other times and other endeavors.

We can move from a framework of maximization to one of optimization.